Penthouse publisher FriendFinder’s IPO has been delayed.
The company, which also runs racy social networking sites Bondage.com, AdultFriendFinder.com, and HotBox.com, hoped to raise $220 million in IPO and was set to hit the market in late January. The company raised $105 million by Wednesday.
But, according to the AP, the start of trading has been delayed.
In its regulatory filing, the company noted that proceeds from the offering would be used to pay off $471 million in debt.
“This is the kind of market where one or two important issues are enough to turn away a lot of investors,” one analyst told the AP. In a healthier market, many investors are willing to look past a few trouble spots.
More from the AP:
Earlier this week, investment bank Imperial Capital Group Inc. postponed its IPO, a person familiar with the offering told the Associated Press. In January, real estate investment trust Terreno Realty Corp. and China-based Daqo New Energy Corp., a solar energy company, shelved offerings.
“It’s looking more and more like it might be a bad sign,” said Nick Einhorn of Renaissance Capital, a Greenwich, Conn., IPO research firm. Some of the companies have had no operating history, heavy debt or slow sales growth — sore points that sliding stock markets are exacerbating.
“This is the kind of market where one or two important issues are enough to turn away a lot of investors,” Einhorn said. In a healthier market, many investors are willing to look past a few trouble spots.
Investors are worried that possible defaults by debt-ridden European countries, high unemployment in the U.S. and efforts to tighten credit in China could hold back the global economic recovery. The Dow Jones industrial average has had eight triple-digit swings in the past 13 trading sessions, and is down about 4 per cent so far in 2010.
“Retail investors, they’re probably still very cautious in the aftermath of what happened in 2008, despite last year’s rally,” said Richard Peterson, a credit analyst at Standard & Poor’s who follows IPOs. “When investor sentiment is poor, there’s not much incentive to offer these shares.”
FriendFinder, formerly known as Penthouse Media Group, will sell 20 million shares under an “FFN” name starting Thursday. Shares are expected to price between $10 and $12.
But analysts say FriendFinder’s sales have been flat. The company said in a regulatory filing that net revenue was $244.4 million in the nine months ended Sept. 30, compared with $243.9 million in the same period a year earlier. In its filing, the company noted that proceeds from the offering would be used to pay off $471 million in debt.
If FriendFinder and Patriot don’t start trading until next week, that will crowd the schedule — five other companies are scheduled to go public — and create more competition. That could lead more companies to trim or delay their offerings.
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